This invention relates to a transaction system in which a portable token is used in conjunction with another device, often termed a terminal, to perform a transaction of some kind. At present, commonly available portable tokens are of a very simple passive kind and are often termed credit cards or service cards, the latter being usable in conjunction with data terminals to permit the withdrawal of cash from a bank account or the like. Tokens which are presently in common usage are passive, in the sense that they do not possess on-board processing or computing capability but instead carry an identity code which is compared by the co-operating data terminal with a code which is entered manually by the bearer of the token. This identity code comparison acts merely as a security check to confirm that the bearer of the token is indeed entitled to conduct the transaction. It has been proposed to enhance the usefulness and sophistication of such a token by including within it a data processing capability which would greatly extend the range of transactions and functions which it could be used to perform. The presence of such a capability on-board the token makes the interaction between it and the terminal much more critical and introduces difficulties which are not of real significance for a conventional passive credit card or cash dispenser card. The present invention seeks to provide an improved transaction system.